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BERGEN BRUNSWIG EXTENDING TIES TO HUMANA HOSPITALS

Executive Summary

BERGEN BRUNSWIG EXTENDING TIES TO HUMANA HOSPITALS through a long supply agreement July 16 press release, Bergen and Humana jointly announced that they have signed a "3-1/2 year contract for the purchase of selected pharmaceuticals and hospital supplies for all Humana facilities from various Bergen distribution centers nationwide. Revenues are estimated to exceed $200 mil. over the life of the contract." Bergen and Humana already have an "established business relationship," a Bergen spokesman noted. The contract will be Bergen's largest single contract with a hospital organization, although the whslr. has smaller contracts with other hospital chains and buying groups, the spokesman said. The spokesman said that the contract would probably be graduated, with the weight of the dollar volume coming later in the contract period. Bergen currently supplies 39 Humana hospitals nationwide, and the new agreement calls for Bergen to become the primary drug whslr. for all 82 of the for-profit hospital chain's institutions when the agreement begins to be phased in after Sept. 2. According to Humana, the prime whslr. designation means that, where possible, Bergen will supply no less than 90% of the pharmaceutical requirements of individual Humana hospitals. A Humana spokesman said that the agreement will start with pharmaceuticals, and will be extended to medical/surgical supplies over the life of the contract. I.V. solutions, he noted, are not regarded as part of the pharmaceutical component of the agreement, and will continue to be purchased directly from manufacturers. Two years ago, Humana contracted with Abbott for the supply of I.V. solutions and sets. Humana also moved to fill in the gaps in its medical and surgical supply channels with a $33 mil. primary vendor contract with Squibb to obtain device and diagnostic products marketed by three Squibb subsidiaries: Advance Technology Laboratories, Spacelabs and Squibb Diagnostics. The Squibb agreement runs for three years at an average annual volume of $11 mil.

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